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China's Aggressive Stance on US Trade Probe

By Patrick Higgins  |  24/08/2017 13:17
According to a statement released by Ministry of Commerce Gao Feng today, China will utilise all available means to counter US trade probes into illegal Chinese interests and Chinese theft of American intellectual property.
 
Similarly, on Monday the ministry spoke of "strong dissatisfaction" with the launch of the US trade investigation by order of President Trump, calling the decision "irresponsible”.
 
Additionally, Chinese governmental support for Chinese overseas investment will remain unmodified, according to Mr. Gao, with projects relating to China's Belt and Road initiative being given priority over other projects.  The Belt and Road initiative is part of China's push to draw major Eurasian countries into the Chinese economic sphere, such as Kazakhstan, Pakistan, and Turkey, and develop closer ties with other middle and major powers, including Russia.  China hopes through its leadership in the economic revitalisation of the ancient Silk Road that it will become the world power it has endeavored to become.
 
Long a critic of alleged Chinese trading malpractices (which he claimed are "raping" American industries), Trump's order of a unilateral investigation without going through the WTO is his first direct action against Chinese economic activities. 
 
Furthermore, almost simultaneously to news of the US probe getting underway, anonymous reports per Reuters have emerged of clandestine meetings last month in Beijing between representatives from 12 European firms.  The meetings concerned the growing threat the Communist Party poses to the domestic operations of foreign companies in China.  These businesses are especially worried about the authoritarian presence of Communist party ‘units’ attempting to acquire control over decision-making processes within the local Chinese operations departments.  Though it is required by law to allow party oversight into the operations of private firms, whether domestic, foreign or joint venture, the presence of such units has long been more symbolic than active.  Under President Xi, however, movements have been made to increase Communist Party control and influence in the economy, these party units have become more aggressive in their oversight.  These groups of Communist officials have been accused of demanding Chinese access to the technology of foreign firms, including American companies, as well as demanding all final say on investment ventures.  Any firm refusal to fulfil these requests coincides with threats of losing access to lucrative Chinese markets.  While there is no way of avoiding the presence of these party organisations, many companies take issue with the amount of control these groups are demanding.
 
The direction of US probes, what may be uncovered and possible Chinese retaliation has yet to be seen.  However, as long as President Trump remains in office, it is probable that the intensity of the investigations will be high and aggressive, and that the US will clamp down hard on any proven Chinese transgressions against American intellectual properties or undercutting of American industries.  The extent of any unilateral actions, besides the implementation of sanctions, will depend on the proven extent of Chinese misdeeds, if there any to be proven at all.  The amount of US debt the Chinese government owns (around $1.10 trillion as of last July) and the level of export-imports (which was $648.2 billion in 2016 per the Office of the United States Trade Representative) must be kept in mind.  President Trump must also tread carefully in his approach to this multi-faceted issue.
 

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